The rally in oil prices eased amid the summer’s liquidity crunch, leaving the commodity at the mercy of broader and more volatile markets.
Although signs of a shortage of the commodity in over-the-counter physical markets have contributed in recent weeks to driving crude futures prices into the longest streak of increases in a year, WTI prices fluctuated on Monday in line with the performance of stocks on Wall Street due to fresh concerns about China’s economy. . The volume of liquidity in the US crude market is near its lowest level since the beginning of the year due to investors traveling during the summer.
“Oil prices are falling when the dollar is rising,” said Edward Moya, senior market analyst at Wanda. “There are concerns about the Chinese real estate sector, which will be a negative drag on global economic growth conditions. The market is not very liquid here, which means We may see a significant rise in the dollar, which will put pressure on crude prices, if the wave of heavy selling in the bond market rages.”
What is also negatively affecting the market sentiment is the expectation that any progress in relations between Iran and the United States will lead to an increase in oil exports from the Middle Eastern country.
The performance in the direct physical trading markets was strong thanks to the supply reduction by the “OPEC +” alliance, and the consistency of demand at better-than-expected rates, which helped oil to rise by about 25% from the lowest level it recorded last June. US crude time spread, which reflects supply and demand at the time of delivery relative to the Cushing Center, Oklahoma, benchmark futures contract, is near its highest level since November.
On Tuesday, a quick update on China’s economy will be released with the release of industrial production figures, including refining activity figures.
Oil prices fell after 7 weekly gains due to fears of a default in China
The country, the world’s largest importer of crude oil, is building new oil refineries, which has boosted demand for imports.
2023-08-14 21:14:32
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